Tata Steel, the world’s sixth-largest steel maker has informed that its Singapore-based wholly owned indirect subsidiary ‘Global Mineral Holdings’ has entered into a binding agreement with New Millennium Capital Corporation (NML).

Canada-based NML is a publicly owned mining company, which involves in exploration and development of iron ore properties. It operates 9.1 billion tonnes of NI 43-101 taconite mineral resources – 6.9 billion tonnes measured and indicated and 2.2 billion tonnes inferred.

Under the arrangement, Tata Steel will acquire 19.9% equity interest of the common shares of the expanded capital base of NML for a consideration of USD 22.6 million. Further, it will also buy an 80% equity interest in NML’s Direct Shipping Ore project (DSO project) located in the province of Newfoundland and Labrador and the province of Quebec.

Tata Steel claims that the latest agreement provides exclusivity to company with respect to both the DSO Project and the LabMag taconite iron ore property located in NL, which is 80% owned by NML and 20% owned by the Naskapi Nation of Kawawachikamach.
   
NML plans to use the net proceeds from the private placement for primarily developing the DSO Project through a definitive feasibility study to be completed in the Q2 of 2009.
 
As per the Agreement, upon completion of the placement Tata Steel is entitled to two nominees on the Board of NML. In addition, Tata Steel is also entitled to a right of first refusal in future placement of equity securities carried by NML and a pre-emptive right in connection with other offerings of equity securities.

 Earlier India’s NMDC had discussed investment in NML but the company had to pull back due to a long gestation period.